EduTech: breaking Into the mainstream

15 Sep 2014

Although education and digital tools in combination have been utilized by business and academia since the early 2000s, 2014 looks like the year when EduTech is set to enter the mass market. Acquisitions in the segment have been growing in both size and volume, and VCs are more willing to invest in the potential they see emanating from emerging markets. EduTech start-ups are increasingly turning to business transfer agents in the hope of securing greater financing or finding a suitable acquirer.

Digital students seek digital platforms

EduTech has been a slow-burning market, its success dependent on the gradual coming together of consumer digital competency and mainstream acceptance of the web as a respected educational tool. Rolling out advanced online learning platforms in an emerging country with low IT literacy levels was always going to be a struggle, while within developed economies academic institutions tended to be slow in accepting new technologies.

This landscape, however, has been transformed by surging Internet penetration, rising from a fifth of the global population in 2008 to one-third by 2013. Meanwhile, a new generation of teenagers and twenty-somethings has a strong rapport with technology, adding to the growing value placed on knowledge in today’s society. This upward trend has led industry sources to project in early 2014 that the EduTech market will reach a global value of US$60.0 billion by 2018.

Market opportunities

Government contracts have traditionally offered the most lucrative opportunities, with large software solutions firms such as Blackboard holding a practical monopoly over the state education market. However, EduTech start-ups are increasingly challenging this landscape by offering more price-conscious solutions targeting end-users rather than large organisations. Third-world economies lacking the necessary fixed educational infrastructure are increasingly looking to digital means in order to provide sufficient academic solutions, providing strong potential for nationwide adoption.

Educational apps have still not reached their full potential despite the popularity of language-learning and brain-test games. Capturing a share of the global mobile gaming market could be key for EduTech apps.

The corporate segment is buying into EduTech wholesale, attracted by its promise of improving worker productivity and knowledge capacity through the streamlined process of distant online learning. Sending staff on costly and time-consuming out-of-office courses is rapidly losing its appeal.

Consumers view education as a valuable investment

EduTech is well placed to capitalise on the growing global demand for academic tools, especially in emerging economies where the swelling number of the lower-middle classes look to education as a path to career success. Emerging markets are set to notch the strongest gains in education spending going forward. EduTech hotspots such as Singapore and Hong Kong are already providing a template for start-ups in the segment, and providing a route to more lucrative markets such as China and Japan.

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